B-116362, DEC. 20, 1956

B-116362, DEC. 20, 1956

TO J. G. WATTS CONSTRUCTION COMPANY:

REFERENCE IS MADE TO YOUR LETTERS OF JULY 21 AND NOVEMBER 20, 1956, RELATIVE TO YOUR CLAIM FOR $43,215 AS ADDITIONAL FIXED FEE UNDER DEPARTMENT OF STATE COST-PLUS-A-FIXED-FEE CONTRACT NO. SCC-1A-2920, DATED APRIL 21, 1952, WHICH WAS TERMINATED FOR THE CONVENIENCE OF THE GOVERNMENT ON MARCH 20, 1953.

IT WAS ESTIMATED THAT THE CONTRACT WORK, WHICH INVOLVED THE CONSTRUCTION OF A BROADCASTING STATION, WOULD BE COMPLETED ON OR BEFORE THE END OF THE FIFTEENTH MONTH FOLLOWING THE PRESENTMENT OF THE SITE BY THE GOVERNMENT. IT WAS EXPRESSLY UNDERSTOOD, HOWEVER, THAT THE CORRECTNESS OF SUCH ESTIMATE WAS NOT GUARANTEED BY EITHER PARTY. APPARENTLY, A SUBSTANTIAL PORTION OF THE SITE WAS MADE AVAILABLE TO YOU ON MARCH 5, 1952, OR TWELVE AND ONE-HALF MONTHS PRIOR TO THE CONTRACT TERMINATION DATE.

FORTY PERCENT, OR $60,000 OF THE AMOUNT OF $150,000 AGREED UPON AS A FIXED FEE, WAS PAID FOR SPECIFIC SERVICES. WITH RESPECT TO THE BALANCE OF $90,000 PAYABLE IN ACCORDANCE WITH ENGINEERING ESTIMATES AS TO THE PHYSICAL COMPLETION OF THE STATION, IT WAS DETERMINED THAT 12.25 PERCENT OF THE CONTRACT WORK WAS COMPLETED WHEN THE CONTRACT WAS TERMINATED. THE AMOUNT OF $11,025, OR 12.25 PERCENT OF $90,000, WAS PAID AND THE ADDITIONAL SUM OF $63,975 WAS CLAIMED AS AN EQUITABLE ADJUSTMENT UNDER ARTICLE XC OF THE CONTRACT. THAT AMOUNT WAS COMPUTED ON THE BASIS THAT YOU WERE ENTITLED TO RECEIVE $75,000, OR TWELVE AND ONE-HALF FIFTEENTHS OF THE AMOUNT OF $90,000, LESS THE SUM OF $11,025 PREVIOUSLY PAID ON THAT PORTION OF THE AGREED FIXED FEE.

ARTICLE XC OF THE CONTRACT PROVIDED THAT IF THE WORK SHOULD BE UNDULY DELAYED BECAUSE OF THE FAILURE OF THE GOVERNMENT TO FURNISH GOVERNMENT- PROCURED DESIGNS, MATERIALS, ETC., "SO AS TO PROLONG THE PERIOD OF PERFORMANCE OF THE CONTRACT, THE CONTRACTOR SHALL TO THE EXTENT OF APPROPRIATED FUNDS AVAILABLE THEREFOR BE ENTITLED TO AN EQUITABLE ADJUSTMENT IN ITS FIXED FEE IN AMOUNT TO BE DETERMINED BY THE DEPARTMENT AND THE CONTRACT SHALL BE MODIFIED ACCORDINGLY. ANY CLAIM FOR ADJUSTMENT HEREUNDER MUST BE ASSERTED WITHIN THIRTY (30) DAYS FROM DATE OF COMMENCEMENT OF ANY SUCH DELAY.'

THE VOUCHER COVERING THE CLAIM FOR $63,975, TOGETHER WITH AN ENGINEERING REPORT DATED JUNE 12, 1953, WAS SUBMITTED HERE BY LETTER DATED JULY 22, 1953, FROM MR. HENDRIX NEWMAN, AUTHORIZED CERTIFYING OFFICER, UNITED STATES INFORMATION ADMINISTRATION, WITH THE RECOMMENDATION THAT $20,760--- DETERMINED ON THE BASIS OF THE ENGINEERING REPORT--- BE APPROVED FOR PAYMENT ON THE CLAIM. WE WERE ADVISED THAT THE DEPARTMENT'S CONTRACT TERMINATION COMMITTEE FELT THAT AN EQUITABLE ADJUSTMENT WOULD BE PROPER; THAT THE ENGINEERING DIVISION OF THE DEPARTMENT HAD BEEN REQUESTED TO PERFORM AN ANALYSIS OF THE WORK SCHEDULE AND EVALUATE WHICH PARTS OF THE ALLEGED DELAYS IN PERFORMANCE OF THE CONTRACT WERE ATTRIBUTABLE TO THE GOVERNMENT; THAT IN THE ENGINEERING REPORT THERE WAS SUGGESTED A SETTLEMENT OFFER OF $20,760; AND THAT THE CONTRACT TERMINATION COMMITTEE HAD AGREED THAT SUCH AMOUNT REPRESENTED BOTH EQUITY TO THE GOVERNMENT AND TO THE CONTRACTOR.

THE RECOMMENDED ADJUSTMENT WAS CONSIDERED IN A DECISION DATED SEPTEMBER 21, 1953, TO MR. NEWMAN, AND IN A DECISION DATED DECEMBER 28, 1953, TO THE DIRECTOR, UNITED STATES INFORMATION AGENCY. ALTHOUGH IT APPEARED THAT YOUR COMPANY HAD NOT COMPLIED STRICTLY WITH THE REQUIREMENT OF ARTICLE XC OF THE CONTRACT THAT ANY CLAIM THEREUNDER BE ASSERTED WITHIN 30 DAYS FROM THE COMMENCEMENT OF ANY UNDUE DELAY OF THE GOVERNMENT, IT WAS FINALLY DETERMINED THAT WE SHOULD INTERPOSE NO OBJECTION TO THE RECOMMENDED ALLOWANCE OF $20,760 PROVIDED THAT SUCH AMOUNT WOULD BE PAID AS IN FULL AND FINAL SETTLEMENT OF ALL CLAIMS UNDER THE CONTRACT. THE EXECUTION OF A RELEASE PRIOR TO FINAL SETTLEMENT OF YOUR TERMINATION CLAIMS WAS REQUIRED UNDER ARTICLE XID OF THE CONTRACT.

A COPY OF OUR DECISION OF DECEMBER 28, 1953, WAS FORWARDED TO YOU ON THE DATE OF THE DECISION. IN THIS CONNECTION, YOU STATE IN YOUR LETTER OF JULY 21, 1956, THAT YOU HEARD NOTHING FURTHER ABOUT YOUR FEE UNTIL RECEIPT OF A LETTER AT YOUR PORTLAND OFFICE DATED JANUARY 13, 1954, ADVISING THAT YOU HAD UNTIL JANUARY 25, 1954, TO ACCEPT THE SUM OF $20,760 IN FULL SETTLEMENT OF YOUR FEE. IT APPEARS THAT IN THE LATTER PART OF JANUARY 1954 YOU WERE FURNISHED A COPY OF THE ENGINEERING REPORT DATED JUNE 12, 1953, SINCE THE RECORD SHOWS THAT BY LETTER DATED FEBRUARY 5, 1954, ACCOMPANIED BY A SUMMARY DATED FEBRUARY 1, 1954, YOUR ATTORNEY, MR. L. A. NIKOLORIC, REFERRED TO A CONFERENCE WHICH HAD BEEN ARRANGED IN AN ATTEMPT TO REACH A FINAL SETTLEMENT OF THE CONTRACT AND SET FORTH YOUR COMPANY'S POSITION WITH RESPECT TO THE FINDINGS IN THE GOVERNMENT'S ENGINEERING REPORT. IT WAS SUGGESTED, IN EFFECT, THAT IF IT COULD NOT BE ESTABLISHED THAT ALL OF THE DELAYS IN THE PERFORMANCE OF THE WORK WERE ATTRIBUTABLE TO THE GOVERNMENT, THE AMOUNT DUE YOUR COMPANY ON THE BASIS OF THE PERCENTAGE FORMULA USED IN THE ENGINEERING REPORT SHOULD BE CONSIDERED AS BEING NO LESS THAN $41,280.

WITH A REPORT DATED SEPTEMBER 20, 1956, FROM THE UNITED STATES INFORMATION AGENCY, THERE WAS FURNISHED A COPY OF "MINUTES OF MEETING-- 2/11/54 11:00 A.M. J. C. WATTS CONSTRUCTION COMPANY," INDICATING THAT AT 4:30 P.M., FEBRUARY 11, 1954, THE CONTRACTING OFFICER ADVISED MR. NIKOLORIC THAT, AFTER A COMPLETE REEXAMINATION OF THE CLAIM, HE WOULD STAND BY HIS OFFER OF JANUARY 13, 1954, IN THE AMOUNT OF $20,760 IN/FULL AND FINAL SETTLEMENT OF SUCH CLAIM.

WE RECEIVED A LETTER DATED FEBRUARY 15, 1954, FROM MR. NIKOLORIC, AND A LETTER DATED MARCH 1, 1954, FROM MR. THEODORE A. MILLER OF THE FIRM OF DAVIDSON AND NIKOLORIC, WHICH REQUESTED THAT YOUR CLAIM BE SETTLED BY OUR OFFICE. HOWEVER, IN A LETTER DATED MARCH 11, 1954, SENT IN CARE OF YOUR ATTORNEYS, YOU WERE ADVISED OF THE LIMITED NATURE OF OUR ACTION IN THE CASE; THAT THE DETERMINATION OF THE AMOUNT PROPERLY FOR ALLOWANCE AS AN EQUITABLE ADJUSTMENT TO COMPENSATE YOU FOR THE DELAYS OF THE GOVERNMENT USE, BY THE EXPRESS TERMS OF THE CONTRACT, COMMITTED TO THE DEPARTMENT OF STATE; THAT WE HAD NO JURISDICTION TO MODIFY THAT DETERMINATION; AND THAT, CONSIDERED AS A CLAIM FOR DAMAGES, YOUR CLAIM APPEARED TO BE SO UNLIQUIDATED OR INCAPABLE OF BEING MATHEMATICALLY COMPUTED AS TO PLACE IT IN THE CATEGORY OF UNLIQUIDATED CLAIMS WHICH WE DO NOT UNDERTAKE TO SETTLE.

IT APPEARS FROM THE QUOTED PORTION OF YOUR LETTER OF NOVEMBER 20, 1956, THAT MR. NIKOLORIC, SOMETIME BEFORE MARCH 11, 1954, DISCUSSED THE SETTLEMENT OFFER WITH ONE OF OUR ATTORNEYS AND LATER ADVISED YOU TO ACCEPT THE OFFER. IT IS REPORTED THAT ON THE DATE YOU ACCEPTED $20,760 IN FULL SETTLEMENT OF YOUR CLAIM AND EXECUTED A FORMAL RELEASE, RELEASING "THE UNITED STATES OF AMERICA, ITS OFFICERS AND EMPLOYEES FROM ANY AND ALL CLAIMS OF ANY TYPE, SORT OR DESCRIPTION, WHICH MAY HAVE HERETOFORE ARISEN, OR WHICH MAY HEREAFTER ARISE AGAINST SAID GOVERNMENT," ETC.

THE ALLEGATIONS MADE IN YOUR LETTER OF JULY 21, 1956, ATTACKING THE VALIDITY OF THE RELEASE, WERE CATEGORICALLY DENIED IN THE REPORT DATED SEPTEMBER 20, 1956, FROM THE UNITED STATES INFORMATION AGENCY. THIS REPORT WAS EXAMINED ON OCTOBER 31, 1956, BY AN ATTORNEY REPRESENTING YOUR COMPANY AND YOU HAVE REQUESTED FURTHER CONSIDERATION OF YOUR CLAIM PRIMARILY ON THE BASIS OF A STATEMENT RECEIVED FROM MR. NIKOLORIC WHICH RELATES GENERALLY TO HIS VIEW THAT A GREATER AMOUNT MIGHT HAVE BEEN ALLOWED ON YOUR CLAIM EXCEPT FOR THE FACT THAT A SENATE INVESTIGATING COMMITTEE HAD SHOWN AN INTEREST IN THE CONDUCT OF THE "VOICE OF AMERICA" PROGRAM. WHETHER OR NOT, AS ALLEGED BY MR. NIKOLORIC, THERE WAS A RELUCTANCE TO DO ANYTHING WHICH MIGHT BRING CRITICISM BY THE COMMITTEE OR THAT A REPRESENTATIVE OF OUR OFFICE HAD EXPRESSED SYMPATHY FOR YOUR POSITION IN VIEW OF THE COMMITTEE HEARINGS, WOULD NOT APPEAR TO WARRANT THE CONCLUSION THAT THE SETTLEMENT AS FINALLY AGREED UPON WAS THE RESULT OF ANY COERCIVE ACTION ON THE PART OF THE GOVERNMENT OFFICIALS CONCERNED. NOR DOES THE RECORD SHOW OTHER THAN THAT THE SETTLEMENT WAS ARRIVED AT AFTER A FULL DISCUSSION OF THE ISSUES INVOLVED.

IN THE CIRCUMSTANCES, WE ARE OF THE OPINION THAT YOUR COMPANY NOW HAS NO VALID CLAIM AGAINST THE GOVERNMENT, SINCE IT IS WELL SETTLED THAT, IN THE ABSENCE OF A CLEAR SHOWING OF MUTUAL MISTAKE, FRAUD OR DURESS, THE EXECUTION OF A RELEASE OF THE NATURE OF THE ONE HERE INVOLVED PRECLUDES A CONTRACTOR FROM THEREAFTER PRESENTING ANY CLAIM ARISING OUT OF THE TRANSACTIONS COVERED BY THE TERMS OF THE RELEASE. SEE UNITED STATES V. WM. CRAMP AND SONS SHIP AND ENGINE BUILDING COMPANY, 206 U.S. 118; PELTON WATER WHEEL COMPANY V. UNITED STATES, 55 C. CLS. 31; C. R. WILSON BODY COMPANY V. UNITED STATES, 59 C. CLS. 611; 3 COMP. GEN. 380; 15 ID. 939; 23 ID. 632, AND 25 ID. 893.

ASIDE FROM THE QUESTION RAISED AS TO THE VALIDITY OF THE FINAL SETTLEMENT AND RELEASE, EXAMINATION OF THE RECORD FAILS TO DISCLOSE ANY SUBSTANTIAL BASIS FOR ASSUMING THAT THE PAYMENT OF THE AMOUNT OF $20,760 WAS NOT ADEQUATE AS AN EQUITABLE SETTLEMENT OF YOUR CLAIM UNDER THE CONTRACT. ALTHOUGH THE GOVERNMENT MAY HAVE DELAYED THE PROGRESS OF SOME OF THE WORK FOR A GIVEN PERIOD OF TIME OR AT VARIOUS INTERVALS, IT WAS A QUESTION OF FACT AS TO WHAT EXTENT EACH SUCH DELAY OPERATED "TO PROLONG THE PERIOD OF PERFORMANCE OF THE CONTRACT" WITHIN THE MEANING OF THAT TERM AS USED IN ARTICLE XC OF THE CONTRACT. ANY SUCH DETERMINATION WAS OBVIOUSLY COMPLICATED AND DIFFICULT, SINCE THE CONTRACT WORK COVERED NUMEROUS ITEMS, AND IT DOES NOT APPEAR THAT THE PERCENTAGE FORMULA APPLIED IN THE COMPUTATION OF THE AMOUNT OF $20,760 WAS SO ARBITRARY OR UNREASONABLE AS TO AFFECT THE VALIDITY OF THE EQUITABLE ADJUSTMENT OF YOUR FIXED FEE. YOUR CLAIM FOR THE DIFFERENCE BETWEEN THAT AMOUNT AND THE ABOVE $41,280 FIGURE RESTS UPON YOUR ASSERTIONS IN THE SUMMARY DATED FEBRUARY 1, 1954, THAT THE VARIOUS ITEMS OF WORK WERE DELAYED TO A GREATER EXTENT THAN THAT SET FORTH IN THE GOVERNMENT'S ENGINEERING REPORT. WERE THE MATTER PROPERLY BEFORE US FOR CONSIDERATION IN THE FIRST INSTANCE, WE WOULD BE BOUND BY THE ADMINISTRATIVE DETERMINATION OF THE EXTENT OF THE DELAY.

SINCE YOUR CLAIM OF COERCION OR MISREPRESENTATION IN THE EXECUTION OF THE RELEASE DOES NOT APPEAR TO BE SATISFACTORILY SUPPORTED, AND SINCE IT HAS LONG BEEN THE ESTABLISHED RULE THAT THE GOVERNMENT ACCOUNTING AND ADMINISTRATIVE OFFICERS SHOULD REJECT OR DISALLOW ALL CLAIMS OF DOUBTFUL VALIDITY OR AS TO WHICH IT IS BELIEVED THAT THERE MAY BE A SUBSTANTIAL LEGAL DEFENSE, YOUR PRESENT CLAIM FOR THE DIFFERENCE BETWEEN THE SUM OF $63,975 AND THE AMOUNT OF $20,760, ALLOWED AS AN EQUITABLE ADJUSTMENT UNDER ARTICLE XC OF YOUR CONTRACT, IS HEREBY DISALLOWED. SEE LONGWILL V. UNITED STATES, 17 C. CLS. 288, 291; AND CHARLES V. UNITED STATES, 19 C. CLS. 316, 319.